Sommer v C Pty Ltd (No.4)
[2020] FCCA 2589
•18 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SOMMER v C PTY LTD (No.4) | [2020] FCCA 2589 |
| Catchwords: BANKRUPTCY – PRACTICE AND PROCEDURE – whether costs assessor should be joined as a party – order made requiring the applicant to file an amended application joining costs assessor as second respondent. BANKRUPTCY – PRACTICE AND PROCEDURE – whether particular paragraphs of a document titled “Statement of Applicant’s Claim” should be struck out because they do not give fair notice of the case the applicant intends to make or because the claims intended to be conveyed by those paragraphs are bound to fail – some paragraphs ordered to be struck out. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.35A(2A), 41(6A) Federal Circuit Court Act 1999 (Cth), s.8(3) |
| Cases cited: CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 |
| Applicant: | MS SOMMER |
| Respondent: | C PTY LTD |
| File Number: | SYG 697 of 2020 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 11 September 2020 |
| Date of Last Submission: | 11 September 2020 |
| Delivered at: | Sydney |
| Delivered on: | 18 September 2020 |
REPRESENTATION
| Applicant in person, by telephone |
| Counsel for the Respondent: | Ms M Castle, by telephone |
| Solicitors for the Respondent: | ICL Lawyers |
ORDERS
Order 4 described in the Statement of Applicant’s Claim, and paragraphs 25, 26, 27, 28, and 29 of the Statement of Applicant’s Claim, are struck out.
The applicant have leave to reformulate the matters alleged in paragraphs 25, 26, 27, 28, and 29 of the Statement of Applicant’s Claim if the applicant so elects.
Until further order, the respondent is restrained from taking any step in relation to the application the respondent made on 23 July 2020 (Costs Review Application) for review of the determination of costs made by Ms M recorded in two costs certificates both issued on 18 July 2019 (Costs Certificates), other than taking such step or steps that is or are necessary to withdraw or abandon the Costs Review Application.
By 22 September 2020 the applicant file an amended application in which:
(a)Ms M, in her capacity as a costs assessor, is named as the second respondent.
(b)The following paragraph is added after paragraph 2 under the heading “Details of claim”:
3.A declaration that, on the grounds stated in the “Grounds of review” contained in the “Application for Review of Determination(s) of a Costs Assessor” the first respondent lodged on 23 July 2020 with the Manager, Costs Assessment pursuant to s.83 of the Legal Profession Uniform Law Application Act 2014 (NSW) the costs determinations recorded in the Certificates of Determination of Costs issued by the second respondent on 18 July 2020 are affected by jurisdictional error and for that reason are of no legal effect.
(c)Amendments consequential to the amendments referred to in (a) and (b) are made.
THE COURT NOTES THAT
On the day these orders are made the associate to Judge Manousaridis will forward to the parties by email the form of the amended application the applicant is to file pursuant to order 4.
THE COURT ORDERS THAT
By 5.00 pm on 25 September 2020 the applicant serve by email on the respondent, on Ms M, and on the Manager, Costs Assessment, a sealed copy of the amended application, and a sealed copy of these orders.
Order 4 of the orders made on 21 August 2020 is vacated.
The dates that were fixed for hearing under order 6 of the orders made on 21 August 2020 are vacated.
Subject to order 10 the matter is listed for hearing for two days on 14 and 15 October 2020.
If the dates referred to in order 9 are not convenient to the applicant or to the respondent the applicant or respondent may, by 5.00 pm on 21 September 2020, inform the associate to Judge Manousaridis by email that the dates are not convenient and suggest some other days in the weeks commencing on 12 and 19 October 2020.
The respondent file and serve any further affidavits on which it intends to rely by 25 September 2020.
The matter is listed for directions before Judge Manousaridis at 9.30 am on 2 October 2020, such directions hearing to be conducted by telephone.
Pursuant to s.41(6A) of the Bankruptcy Act 1966 (Cth) and r.3.03 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), on condition that Bankruptcy Notice No. …54 issued on … 2020 was served on the applicant on 28 February 2020, the time for compliance by the applicant with the requirements of the Bankruptcy Notice is extended up to and including 15 October 2020.
THE COURT NOTES THAT
The following are issues in the proceeding:
(a)Whether the document titled “Further Statement of Reasons” dated 9 September 2020 prepared by Ms M in her capacity as a costs assessor constitutes a “new determination” within the meaning of reg.43 of the Legal Profession Uniform Law Application Regulation 2015 (NSW).
(b)Assuming the “Further Statement of Reasons” is a “new determination” within the meaning of reg.43 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) whether it has any legal effect because it may have been issued in breach of any duty of procedural fairness the Manager, Costs Assessment, or the costs assessor, may have owed the applicant, or for any other reason having regard to the circumstances in which the “Further Statement of Reasons” was issued.
IT IS NOTED that publication of this judgment under the pseudonym Sommer & C Pty Ltd (No.4) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 697 of 2020
| MS SOMMER |
Applicant
And
| C PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
In these reasons for judgment I consider three questions.
a)The first is whether I should make an order restraining the respondent from taking any further steps in an application (Costs Review Application) the respondent made under s.83(1) of the Legal Profession Uniform Law Application Act 2014 (NSW) (LP Act) in relation to a determination recorded in a costs certificate (Costs Certificate). I have described the circumstances in which the Costs Certificate was issued in my reasons for judgment of 5 June 2020 (first judgment);[1] and I have described the nature of the Costs Review Application in my reasons for judgment of 7 August 2020 (third judgment).[2]
b)The second question is whether I should direct the applicant to file an amended application in which the costs assessor who issued the Costs Certificate be added as a party and in which orders in the nature of certiorari and mandamus are to be sought against the costs assessor.
c)The third question is whether I should strike out paragraphs 16 to 29 of the “Statement of Applicant’s Claim”.
[1] Sommer v C Pty Ltd [2020] FCCA 1412
[2] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156
These three questions arise out of a complicated procedural background. Before I consider each question, it will be necessary to describe that background.
Procedural background
I begin with the matter that is before me. It began as an application made by the applicant, who is not legally represented, for an order that a bankruptcy notice the respondent caused to be served on her be set aside. The bankruptcy notice demands payment of a judgment that was registered on the basis of the Costs Certificate, less a payment the respondent received after the Costs Certificate was registered.
Application for transfer to Family Court
On 27 April 2020 the applicant filed an application for an order under s.35A(2A) of the Bankruptcy Act 1966 (Cth) that the application to set aside the bankruptcy notice be transferred to the Family Court of Australia (FCoA). On 5 June 2020 I dismissed that application for the reasons set out in the first judgment.[3] I made an order setting down for hearing on 10 July 2020 the application to set aside the bankruptcy notice. I also made directions for the parties to file any further affidavits on which they intend to rely.
[3] Sommer v C Pty Ltd [2020] FCCA 1412
In the first judgment I set out the claims I understood the applicant makes and the evidence that was before me. I identified two sets of issues I considered arose or could arise out of that evidence. The first set of issues are those arising out of the circumstances in which, on 8 March 2019, Ms A of the respondent sent to the applicant an email attaching a “Notice to Cease to Act”. The applicant and respondent each claim that the other terminated the solicitor client relationship. I found that the contending claims give rise to issues that include the following:[4]
a)In what circumstances did the relevant provisions of the Retainer Agreement,[5] properly construed, permit the respondent and the applicant to terminate the Retainer Agreement?
b)Did the applicant at the meeting of 5 March 2019 say words to the effect deposed to by Ms A in her affidavit? If so, did that have the effect of terminating the Retainer Agreement? If so, how, and by when?
c)If the applicant did not say words to the effect deposed to by Ms A, or if the applicant did say words to that effect, but those words by themselves did not operate to terminate the Retainer Agreement, was the Retainer Agreement terminated? If so, how, and by when?
d)Whether or not the Retainer Agreement was terminated, what relevance, if any, does or did the Retainer Agreement have to: (i) the applicant’s liability to pay any of the respondent’s legal fees; (ii) the respondent’s ability to apply to have its costs assessed; and (iii) the respondent’s ability to recover its fees?
[4] Sommer v C Pty Ltd [2020] FCCA 1412, at [47]
[5] Being the agreement referred to in Sommer v C Pty Ltd [2020] FCCA 1412, at [10], [11]
The second set of issues I identified concerned the costs determination recorded in the Costs Certificate:[6]
[6] Sommer v C Pty Ltd [2020] FCCA 1412, at [60]
There is one matter I wish to raise; and that relates to the Costs Certificate. The applicant does not make any claim about the Costs Certificate; she accepts she is liable to pay the costs recorded in the Costs Certificate. Nevertheless, on the material before me, there may potentially arise issues of the sort I considered in Obrart v Grego,[[7]] where I held that in certain circumstances a bankruptcy court can go behind a judgment based on a costs certificate if there are substantial reasons for questioning the validity of a costs certificate because the costs certificate was issued on the basis of a costs determination that may be affected by jurisdictional error. I propose, therefore, to invite the parties at the hearing of the application to set aside the bankruptcy to make submissions on the following questions:
a)Is it open to the Court to invite the parties to make submissions on the following matters?
(b)Assuming (a) is answered in the affirmative:
(i)When assessing the $252,423.90 professional fees component of the costs claimed in the tax invoice of 15 March 2019: (A) did the costs assessor go no further than assess the reasonableness of the hourly rates at which the work described in the tax invoice was performed, and that the costs assessor did this by reference to the level of experience of the lawyer who performed the work? or (B) did the costs assessor instead go further and direct her mind to and consider whether the legal costs for the work described in the tax invoice were fair and reasonable for the work so described having regard to the matters identified in s.172(2) of the LP Law, to the extent they are applicable?
ii)When assessing the $127,671.25 disbursements for counsel’s fees: (A) did the costs assessor proceed on the basis that because the applicant did not provide “any objections to the quantum of counsel’s fees” the costs assessor was not required to direct her mind to and consider whether the legal costs claimed by counsel for the work they described in the invoices they issued were fair and reasonable for the work so described having regard to the matters identified in s.172(2) of the LP Law, to the extent they are applicable? (B) Whether or not the costs assessor proceeded on such basis, did the costs assessor direct her mind to and consider whether the legal costs claimed by counsel for the work they described in the invoices they issued were fair and reasonable for the work so described having regard to the matters identified in s.172(2) of the LP Law, to the extent they are applicable?
iii)When considering whether the legal costs described in the tax invoice of 15 March 2019 are fair and reasonable, did the costs assessor have regard to “whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions” (see s.172(3) of the LP Law), and in particular, did the costs assessor have regard to there having been “no disclosure as required prior to the briefing of counsel”, and . . . “a serious failure to advise in advance of increased costs and disbursements generally”? If so, how?
iv)Assuming (i)(A) or (ii)(A) is answered in the affirmative; or (i)(B), (ii)(B), or (iii) is answered in the negative, would the costs determination on the basis of which the Costs Certificate was issued be affected by jurisdictional error such as to give rise to a substantial reason for questioning whether behind the amount recorded in the Costs Certificate which was registered as a judgment there was in truth and reality a debt due to C Lawyers?
[7] Obrart v Grego [2017] FCCA 929, at [52]-[72]
Determination of separate question whether respondent can unilaterally “withdraw” bankruptcy notice
The applicant filed a further affidavit, as she was permitted to do under the directions I made on 5 June 2020. The respondent, however, did not file any affidavits. Instead, on 18 June 2020 it purported to unilaterally withdraw the bankruptcy notice. That led to my hearing on 10 July 2020 the separate determination of the question whether it was open to the respondent to unilaterally withdraw the bankruptcy notice. On 14 July 2020 I published reasons for judgment in which I held it was not open to the respondent to unilaterally withdraw the bankruptcy notice (second judgment).[8]
[8] Sommer v C Pty Ltd (No.2) [2020] FCCA 1898
Application by respondent to set aside bankruptcy notice without trial
The matter came before me for directions on 17 July 2020. The respondent applied for an adjournment of two weeks to give the respondent an opportunity to consider whether it should apply for leave to appeal against my determination of the question whether the respondent could unilaterally withdraw the bankruptcy notice. I adjourned the matter for further directions to 31 July 2020. The respondent decided not to apply for leave to appeal. Instead, on 23 July 2020, without notice to the Court, the respondent initiated the Costs Review Application. As I have set out in the third judgment, in the Costs Review Application the respondent asserts the costs assessor has made errors, which the respondent submitted to me constitute jurisdictional errors.[9]
[9] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156
On 31 July 2020, at the time the matter had been listed for a directions hearing, the respondent applied for an order that the bankruptcy notice be set aside without requiring a further trial. The basis of that application was that there is an “obvious jurisdictional error in the costs assessment” and, for that reason, “the outcome of these proceedings is foregone”; and the “Court should accordingly set aside the bankruptcy notice . . . without requiring . . . a further trial”.[10]
[10] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156, at [1]
On 7 August 2020 I published the third judgment in which I dismissed the respondent’s application that I set aside the bankruptcy notice without trial.[11] I did so for two reasons. First, although the respondent submitted the costs assessment was affected by jurisdictional error, I was not satisfied the respondent had in truth conceded that the costs determination recorded in the Costs Certificate is affected by jurisdictional error. Alternatively, I found that if the respondent has conceded that the costs determination is affected by any jurisdictional error, the respondent’s understanding of what it believes it has conceded is not jurisdictional error as understood by the law, which entails that the purported decision that is affected by jurisdictional error “is a decision that lacks legal foundation and is properly regarded, in law, as no decision at all”.[12] The second reason I dismissed the respondent’s application is I found that there was before me a “matter” which included claims that extended beyond whether the costs determination was affected by jurisdictional error.[13]
[11] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156
[12] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156, at [31], quoting Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; (2002) 209 CLR 597, at pages 614-615 ([51])
[13] Sommer v C Pty Ltd (No.3) [2020] FCCA 2156, at [32]-[44]
The initiation of the Costs Review Application gave rise to identical sets of issues being before two different adjudicative bodies with the potential of those bodies giving conflicting determinations. That is a state of affairs that usually cannot be tolerated; and this Court, being a Court of law and equity,[14] has “an equitable jurisdiction to restrain multiplicity of actions”.[15] The nature of that jurisdiction was considered by the Full Federal Court in Perera v GetSwift Limited,[16] where it noted that the majority in CSR Limited v Cigna Insurance Australia Limited:[17]
recognised two somewhat distinct bases for granting an anti-suit injunction (at 391 to 394). The first basis for granting such relief is the inherent or implied power to protect the integrity of the court’s processes once set in motion. So, the court may grant an injunction to restrain a person from commencing or continuing parallel proceedings in another forum if those proceedings interfere with, or have a tendency to interfere with, the proceedings pending in the court. Moreover, such an inherent or implied power to grant anti-suit injunctions is not restricted to defined and closed categories, save for the boundary condition that it may only be exercised when the administration of justice so demands and when necessary for the protection of the court’s own proceedings or processes.
The second basis invokes equitable jurisdiction to restrain conduct where the bringing of another proceeding involves the unconscientious exercise of legal rights. So, one well-established category of case in which an injunction may be granted in the exercise of that jurisdiction is that involving the commencement of parallel proceedings which are vexatious or oppressive. Relatedly, if a party has made an election as to the forum in which it will proceed, equity may intervene to prevent it pursuing proceedings in relation to the same subject matter in another. Generally, it has been said that the limits of the Court’s equitable jurisdiction are determined by the dictates of equity and good conscience.
[14] Federal Circuit Court Act 1999 (Cth), s.8(3)
[15] Perera v GetSwift Limited [2018] FCAFC 202, at [132]
[16] Perera v GetSwift Limited [2018] FCAFC 202, at [132], [133]
[17] CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345
It was with these principles in mind that on 7 August 2020, in addition to dismissing the respondent’s application to set aside the bankruptcy notice without any further trial, I made the following two orders (7 August orders):
(2) Subject to order 3, the applicant has liberty to apply on such notice as the circumstances warrant for an order that the respondent be restrained from taking any further steps in relation to the “Application for review of determination(s) of a Costs Assessor” referred to in paragraph 8 of the affidavit of Mr L affirmed on 30 July 2020 (Costs Review Application) other than such steps as are necessary to withdraw the Costs Review Application, or to obtain an order staying the Costs Review Application, or to communicate to the Manager, Costs Assessment that the respondent does not intend to take any further steps in relation to the Costs Review Application.
(3) The applicant is not to exercise the liberty reserved by order 2 unless:
(a) the applicant first requests the respondent to undertake in writing that it will not take any further steps in relation to the Costs Review Application other than such steps as are necessary to withdraw the Costs Review Application, or to obtain an order staying the Costs Review Application, or to communicate to the Manager, Costs Assessment that the respondent does not intend to take any further steps in relation to the Costs Review Application; and
(b) the respondent does not give an undertaking to the effect referred to in (a) within seven days after the day on which the applicant requests the respondent give such undertaking.
Hearing on 21 August 2020
In an email sent to my associate on 17 August 2020 the respondent’s lawyer referred to the 7 August orders and noted that on 10 August 2020 the applicant sought the undertaking contemplated by order 3(a) of the 7 August orders, but the respondent had refused to give the undertaking. The respondent’s lawyer further stated:
Some issues have arisen out of the [7 August orders], the [third judgment] and the requested undertaking. The Respondent has briefed Ms Michelle Castle of Counsel, an expert in the area of costs law, and the Respondent seeks an opportunity to address the Court prior to His Honour considering his making of further orders in accordance with Order 2.
Whilst we are mindful of the Court’s, and indeed, the Applicant’s availability, Ms Castle is available on Friday 21 August prior to 2.00pm but then not until Monday 31 August 2020. Ms Castle estimates that an hour may be required and, thus, in the circumstances, the Respondent gives an undertaking not to progress the Review Application until that further appearance and consideration of those submissions by His Honour.
Although we have copied the Applicant to this correspondence, we note that, given the timing of the Orders, the Respondent has not had the opportunity to properly brief Ms Castle, and write to the Applicant seeking the Applicant’s consent to same before contacting this Court, and in this regard, refers to Order 7 made on 7 August 2020.
On 17 August 2020, at my direction, my associate sent to the parties the following email:
His Honour has not been notified by the applicant that she intends to exercise the liberty to apply reserved by the orders made on 7 August 2020.
In those circumstances, his Honour suggests that in the first instance the respondent communicate with the applicant about the undertaking the applicant has requested to give the applicant an opportunity to consider whether, in the light of that communication, the applicant will exercise the liberty to apply.
In an email sent to my associate on 18 August 2020 the applicant stated she had requested the respondent give the undertaking contemplated by order 3(a) of the 7 August orders, that seven days had lapsed since the request was made, and that the respondent’s lawyer “confirmed that the Respondent has not given this undertaking”. Consequently, the applicant requested I make “further orders in accordance with Order 2 of the [7 August orders] in order to restrain the Respondent from taking any further steps in relation to the Application for review of determinations of a Cost Assessor”. I subsequently listed the matter for an interlocutory hearing on 21 August 2020.
At the hearing on 21 August 2020 there was a discussion about the form of an undertaking the respondent might give to the applicant. After a brief adjournment the applicant indicated she would accept a form of undertaking the respondent’s lawyer had communicated to the applicant by email during the short adjournment. Also at the hearing, counsel for the respondent submitted that it was not clear what the applicant’s case was, and that an order should be made requiring the applicant to plead her case. There being no objection from the applicant, I made the following orders:
1.By 28 August 2020 the applicant file and serve a document titled “Statement of Applicant’s Case” in which the applicant:
a.identifies the orders the applicant claims the Court should make; and
b.in relation to each order the applicant claims, sets out in summary form:
i. the material facts on which the applicant relies for the order she seeks; and
ii the reasons why the applicant claims the facts on which she relies entitles her to the order she seeks.
. . . .
3.By 11 September 2020 the respondent file and serve a document titled “Respondent’s Answer to Statement of Applicant’s Case” in which the respondent:
a.responds to each of the facts alleged in the “Statement of Applicant’s Case” by stating whether the respondent admits, denies, or does not admit the alleged fact;
b.sets out in summary form:
i the material facts on which the respondent relies for its case; and
ii the reasons why, given the alleged facts it denies or does not admit and any material facts on which it relies, the applicant is not entitled to any of the orders the applicant claims.
At 9:09 am on 28 August 2020 the applicant filed a document titled “Statement of Applicant’s Claim” (SAC).
Hearing on 3 September 2020
On 1 September 2020 the respondent’s lawyer sent an email to my associate that attached two emails. The first was from the respondent’s lawyer to the Manager, Costs Assessment sent on 21 August 2020 requesting that “until further notice to the Manager, Costs Assessment, and to the Review Respondent, the Review Applicant does not wish to and asks that the Manager, Costs Assessment does not take, further steps in relation to the application for Review (including the extension of time) in Costs Assessment # …79”. This email was in the form discussed at the hearing on 21 August 2020. The second email was from the Manager, Costs Assessment sent on 24 August 2020 stating that “the review application will not be kept in abeyance for an extended period of time”. The Manager, Costs Assessment also requested that he be provided with an email “updating the status of this review application that it is pressed or being withdrawn by 4 September 2020”. Given the response from the Manager, Costs Assessment, as well as the applicant’s having filed the SAC, the respondent’s lawyer requested that the matter be relisted. I subsequently listed the matter for a directions hearing at 4.15 pm on 3 September 2020.
At the hearing on 3 September 2020 two questions were addressed. The first related to the email the Manager, Costs Assessment sent on 24 August 2020. After some discussion I indicated that the undertaking the respondent had given by its email to the applicant on 21 August 2020 had been spent, and said that it would be appropriate for the respondent to undertake such communications with the Manager, Costs Assessment as would be appropriate to seek a stay of the further progress of the Costs Review Application. That is apparent from the following exchange:[18]
[18] 03.09.2020 T9.15
HIS HONOUR: . . . . on my view, the undertaking has been spent.
MS CASTLE: Yes. I’m sorry, your Honour, I misunderstood. I agree with - - -
HIS HONOUR: No, no. No, I think you were wise to do it because if you did something different it might have activated unnecessary misunderstanding. So I think what I’m going to do – again, I will get to you, Ms Sommer, in a moment – is in effect to say nothing and make no order, but the understanding will be . . . that the respondent can undertake such communications with the costs manger [sic] – is that the – that’s the person, isn’t it?
MS CASTLE: Manager of costs assessments.
HIS HONOUR: As is appropriate to seek to stay the further progress of the costs review application or the application for extension of time.
MS CASTLE: May it please the court.
HIS HONOUR: Is that clear enough, Ms Sommer?
MS SOMMER: Yes, that is, your Honour.
The second matter that was addressed at the hearing was the SAC. Counsel for the respondent indicated the respondent intended to apply for an order that parts of the SAC be struck out. In the course of submissions counsel for the respondent referred to a request for particulars the respondent’s lawyer had sent to the applicant. The lawyer for the respondent provided a copy of that letter by email to my associate at 3.47 pm on 3 September 2020. Counsel for the respondent referred to the request for particulars as follows, noting that I might wish to make an order that the applicant provide the particulars:[19]
Your Honour, I should [note] that in approaching the court we were conscious of the need to give [the applicant] some idea of our difficulty and our complaint, so the letter requesting particulars was written. We haven’t received a reply to that. Your Honour might wish to make an order that that be replied to or not. We seek that order, but your Honour, it doesn’t see[m] to me on the current state of the pleading that even a reply to that letter would fully – would put the respondent in a fair position.
[19] 03.09.2020 T13.15
After some discussion with counsel for the respondent, I formed the view there would be no utility in requiring the applicant to provide the particulars sought by the request. I therefore informed the parties I would not require the applicant to respond to the request for particulars. I instead set down for hearing on 11 September 2020 the respondent’s application to strike out all or part of the SAC.
Events leading to hearing on 11 September 2020
On 4 September 2020 the respondent’s lawyer, Mr Wiederman, sent the following email to the Manager, Costs Assessment.
Following the parties’ appearance before His Honour Manousaridis J in the Federal Circuit Court of Australia yesterday, the Review Applicant now presses its application for an extension of time for the reasons outlined in the review application.
The email Mr Wiederman sent to the Manager, Costs Assessment, on 4 September 2020 came to my attention on 7 September 2020 after the applicant sent the email to my associate’s email address in the evening of 4 September 2020 (copied to Mr Wiederman). In her email the applicant said: “It was my understanding that at yesterday's hearing, His Honour stated to the Respondent to communicate to the Manager to seek stay until the matter is dealt with in this Court”. At my direction, on 7 September 2020 my associate sent the following email to the parties:
In addition to hearing at 10:30 am on 11 September 2020 the respondent’s application to strike out all or part of the applicant’s [SAC], his Honour proposes to invite submissions on the following two questions:
1.Whether an order should be made restraining the respondent until further order from taking any further step in Costs Review Application …79 & C Pty Ltd -ats-Sommer.
2.Whether an order should be made directing the applicant to file and serve an amended application in which:
(a)Ms M, in her capacity as a costs assessor, is named as the second respondent; and
(b)the applicant claims the following orders pursuant to s.69 of the Supreme Court Act 1974 (NSW) [sic]:
(i)an order in the nature of certiorari requiring Ms M, in her capacity as a costs assessor, bring before the Court the Certificate of Determination of Costs and Certificate of Determination of Manager’s Assessment Costs, both issued on 18 July 2019, in relation to the application for a costs assessment bearing the reference no....79 for the Court to deal with the certificates as the Court sees fit;
(ii)an order quashing the decision or decisions recorded in the certificates referred to in (i); and
(iii)an order that the application for assessment of costs be remitted to Ms M, her capacity as a costs assessor, to be determined according to law.
If at the hearing on 11 September 2020 the respondent proposes to give any explanation in relation to the circumstances in which and the reasons for which the respondent’s solicitor sent the email of 4 September 2020 to the Manager, Costs Assessment in the form that he did, such explanation is to be given by affidavit.
According to Mr Wiederman, on 7 September 2020 he ordered a transcript of the hearing of 3 September 2020. He does not say why he ordered the transcript. What is clear is that, having received the email from the applicant on 4 September 2020 in which she stated it was her understanding that “His Honour stated to the Respondent to communicate to the Manager to seek stay until the matter is dealt with in this Court”, and having ordered a transcript of the hearing before me on 3 September 2020, Mr Wiederman did not send any communication to the Manager, Costs Assessment to withdraw or qualify the communication Mr Wiederman had sent on 4 September 2020.
On 8 September 2020 at 12.54 pm the Costs Assessor, Ms M, sent an email to the parties in which she stated as follows:
The Manager, Costs Assessments, has drawn the above Review Application to my attention.
Noting in particular paragraph 60 of the judgement [sic] referred to , I would propose to issue a Further Statement of Reasons with respect to inadvertent errors which may have arisen in the course of the assessment.
Paragraph 60 seems to identify concerns about whether or not such inadvertent error has occurred.
With His Honour’s judgment in mind, to provide further assistance to the parties, I can confirm that the Further Reasons will deal specifically with the requirements of s.172 of the UPUL as referred to by his Honour.
I am in the course of drafting the Further Reasons and hope to have them available within two days from today’s date at the latest. It is intended that the Further Reasons will serve to supplement the Reasons already given. I will forward a copy to the Manager, Costs Assessments, as soon as the Reasons are finalised.
After she received this email, at 2:13 pm on 8 September 2020 the applicant sent the following email to the Manager, Costs Assessment:
I refer to the email below which I received from Ms M today advising that you provided the application for her to provide a response within two days.
May you kindly confirm if you [are] aware of the email below and if you requested this information from Ms M?
The Manager, Costs Assessment responded by email sent at 7:58 am on 9 September 2020 as follows:
Upon the filing of review application the Manager, Costs Assessment send the original costs assessor a copy of the review application, together with a request for their file, which is the usual practice when a review application has been lodged.
In doing so, the reasons for the review applicant seeking an extension were drawn to the costs assessor’s attention.
The Manager of Costs Assessment raised with Ms M the claim made by the review applicant that an inadvertent error had occurred and invited the costs assessor to consider that allegation, as doing so, may alleviate the parties incurring the costs of the review panels assessment.
Clause 43 of the Legal Profession Uniform Law Application Regulation NSW 2015 states:
Clause 43 Correction of error in determination
(1) At any time after making a determination, a costs assessor may, for the purpose of correcting an inadvertent error in the determination:
(a) make a new determination in substitution for the previous determination, and
(b) issue a certificate under section 70 or 71 of the application Act that sets out the new determination.
(2) The certificate replaces any certificate setting out the previous determination of the costs assessor that has already been issued by the costs assessor.
(3) On the filing of the replacement certificate in the office or registry of a court having jurisdiction to order the payment of the amount of the new determination, any judgment that is taken to have been effected by the filing of that previously issued certificate is varied accordingly.
It is the Manager, Costs Assessments understanding that the costs assessor will address the inadvertent error claim made in the review application, in their further Statement of Reasons.
At 9.10 am on 9 September 2020 the applicant sent an email to the Manager, Costs Assessment (copied to Mr Wiederman) in which she stated as follows (emphasis in original):
Thank you kindly for your prompt response.
At the Hearing of 4 September 2020, referred to by the Review Applicant’s legal representative in his email on the same day, His Honour Mansouridis [sic] instructed the Review Applicant to write to the Manager, Costs Assessment for the sole purpose to request that the application is kept in abeyance until the matter is dealt with in the Federal Circuit Court.
The Review Applicant disobeyed His Honour’s instructions by instead, seeking to press the application rather than comply with His Honour’s request for the review application to be stayed.
A further hearing will be held Friday, 11 September 2020 to restrain the Review Applicant from taking any further steps in the Costs Review Application until further order. The Review Applicant is required to provide an explanation to His Honour regarding the reasons why they disobeyed His Honour’s instructions by affidavit.
The Review Applicant’s legal representative can confirm this with you.
For these reasons I ask that no further action is taken in regards to the review application until after any orders are made [on] 11 September 2020.
Mr Wiederman did not respond to this email. In particular, he did not send an email to the Manager, Costs Assessment, disputing the correctness of the understanding the applicant communicated in her email of what occurred at the hearing on 3 September 2020.
At 4:40 pm on 9 September 2020 the Manager, Costs Assessment sent to the respondent’s lawyer and the applicant the following email:
In response to the review application, specifically, the claim of an inadvertent error within it, Costs Assessor Ms M has prepared the attached Further Statement of Reasons for the parties consideration.
With them in mind, the applicant is requested to clarify by way of return email by 18 September 2020 whether or not the review application is still being pressed, and if there is any impediment to the review application proceeding in light of any orders made in the Federal Circuit Court.
If the review application is being pressed the review respondent is requested to provide their submissions in response to the review application and above submissions that are to be provided by the review applicant by 2 October 2020.
The email attached Costs Assessor Ms M’s “Further Statement of Reasons” (CA Supplementary Reasons). It would be appropriate to reproduce those reasons in full:
1.On or about 18 July 2019 Reasons with respect to Practitioner/Client costs issued in this Assessment Application, were sent to the parties on or about 30 July 2019.
2. Subsequently, proceedings have issued in the Federal Circuit Court with respect to the issue of a Bankruptcy Notice against [the applicant], respondent to the Costs Application, by the solicitor, [the respondent]. I understand those proceedings may still be on foot as at the date of these supplementary Reasons. I am providing these supplementary Reasons to the parties with a view to clarifying an inadvertent error or omission in the Reasons by my failure to make reference to matters set out in s.172 of the Legal Profession Uniform Law (NSW) (hereinafter referred to as the “LPUL”).
3. In these further Reasons reference to “costs” includes disbursements such as counsel’s fees. In determining the costs as set out in paragraph 68 of the Determination I gave consideration to whether, in accordance with s.172(1) of the LPUL, the costs were no more than fair and reasonable in all the circumstances and in particular, whether they were: (a) proportionately and reasonably incurred; and (b) proportionate and reasonable in amount. I considered that the costs as assessed satisfied both criteria.
4. I also gave consideration to each of the criteria set out in s.172(2). I determined that the costs as assessed reasonably reflected each of the criteria set out in s.172(2) (a-f).
5. With respect to s.172(2)(b) and (c) I have referred in the Reasons to the children’s issues and noted that the litigation was particularly acrimonious with the breakdown in communication between the parties resulting in communication on numerous issues being undertaken by the solicitors rather than the parents-often with urgency. With respect to the property, there was complexity in that two of the three properties in dispute were owned in conjunction with a member of the husband’s family and his company, resulting in complex and difficult proceedings in particular in relation to contributions by persons outside the marriage. In relation to s.172(e-f) I had formed the view that there was a reasonably high standard of solicitor/client communication and service as referred to in paragraph 67 of the Reasons.
6. In relation to counsel’s fees, I had considered the individual bills of counsel briefed and had determined that in all the circumstances those costs as assessed were proportionate, reasonably incurred, and proportionate and reasonable in amount. There were numerous interim applications in which counsel appeared and counsel’s advice was heavily relied upon. Counsel’s hourly and daily rates and charges were commensurate with reasonable and expected charges of counsel appearing in such a matter in the Federal Circuit court. In the Reasons I have referred to the extent of reliance on counsel by the instructing solicitors and determined that a reduction to the solicitor’s hourly rate was appropriate as opposed to a reduction to Counsel’s charges. Although the matter had not proceeded to final hearing, the nature of the issues in the proceedings was such that senior counsel may well have been briefed, having regard to the volume of documentation as well as the property issues. I considered that the criteria set out in s.172(2) were reasonably reflected in the quantum of junior counsel’s fees.
7. In reaching the determination as to the fair and reasonable costs, I also considered to whether or not the costs conform to the disclosure requirements of the LPUL , the Uniform Legal Profession Rules, and any fixed costs legislative provisions – I did not determine however that there were any relevant fixed costs provisions applicable to the costs in question. The costs were assessed having taken into account the failures, described in the Reasons, to comply fully with the disclosure provisions of the LPUL, with resultant deductions to hourly rates below those set out in the solicitor’s costs disclosure documents, and disallowance of claims for work by administrative staff in particular. I have not determined that there was any reason to further reduce the costs solely on account of the lack of compliance with the disclosure provisions of the legislation.
These email exchanges came to my attention in the afternoon of 10 September 2020 in an email the respondent’s lawyer sent to my associate. In that email the respondent’s lawyer requested that he be granted “further time to prepare submissions in relation to His Honour’s proposal generally, but also in relation to the impact, if any, of the Further Reasons”. The respondent’s lawyer, however, said the respondent still wished to be heard on 11 September 2020 “in relation to its application to strike out all or part of the applicant’s Statement of Applicant’s Claim”.
Before I turn to the hearing of 11 September 2020, there are a number of observations that may be made about the issuing of the CA Supplementary Reasons. First, it appears that the Manager, Costs Assessment characterised the nature of the claims the respondent intends to make in the Costs Review Application as a claim of “inadvertent error”. It is not apparent on what process of reasoning the Manager, Costs Assessment, relied to characterise the grounds on which the respondent stated in its Costs Review Application as claiming “inadvertent error”. It is not apparent how the grounds on which the respondent relies in the Costs Review Application could reasonably be characterised as claiming inadvertent error.
Second, according to his email to the applicant sent at 7.58 am on 9 September 2020, the Manager, Costs Assessment, “invited” the costs assessor, Ms M, to consider “that allegation”, namely, the allegation of “inadvertent error”. The Manager, Costs Assessment, however, has not referred to any statutory power which authorised him to extend any such invitation to the costs assessor. It is not apparent the Manager, Costs Assessment, had any statutory authority to make any invitation of the sort he apparently made to the costs assessor.
Third, there is nothing in the material before me that suggests the Manager, Costs Assessment gave the applicant or respondent notice that he intended to “invite” the costs assessor to consider “that allegation”, namely, the allegation of “inadvertent error”, and therefore did not invite the applicant or the respondent to make submissions on whether the Manager, Costs Assessment, had the power to make the suggestion he appears to have made to the costs assessor and, if so, whether it was open for the claims the respondent made in the Costs Review Application to be characterised as a claim of “inadvertent error in the determination”.
Fourth, the Manager, Costs Assessment, appears to have ignored the applicant’s email sent at 9.10 am on 9 September 2020. There is nothing to suggest he made any enquiry of the respondent’s lawyers about whether, as the applicant claimed in her email, I had instructed the respondent to “write to the Manager, Costs Assessment for the sole purpose to request that the application is kept in abeyance until the matter is dealt with in the Federal Circuit Court”, and that the respondent had “disobeyed His Honour’s instructions by instead, seeking to press the application rather than comply with His Honour’s request for the review application to be stayed” (emphasis in original email). There is nothing to suggest the Manager, Costs Assessment, had given any consideration to the applicant’s request that “no further action is taken in regards to the review application until after any orders are made [on] 11 September 2020”.
Fifth, from the fact that, according to the Manager, Costs Assessment, he “invited” the costs assessor, Ms M, to consider “that allegation”, namely, the allegation of “inadvertent error”, there is the possibility that a fair minded lay observer could infer that the Manager, Costs Assessment, induced the costs assessor to form a view about the nature of the proposed grounds of review of the costs determination in circumstances where it would not have occurred to the costs assessor to characterise the grounds as claiming “inadvertent error”.
Sixth, it is difficult to see how the CA Supplementary Reasons can properly be characterised as the making of “a new determination in substitution for the previous determination” within the meaning of reg.43 of the Legal Profession Uniform Law Application Regulation 2015 (NSW) (LPUL Regulations). That difficulty is manifested by at least three things: first, the heading, namely, “Further Statement of Reasons”; second, the “error” the costs assessor identifies in the CA Supplementary Reasons, namely, “an inadvertent error or omission in the Reasons by my failure to make reference to matters set out in s.172 of the Legal Profession Uniform Law (NSW) (hereinafter referred to as the “LPUL”)”; and, third, the costs assessor’s not having issued a “new determination in substitution for the previous determination”. In short, the CA Supplementary Reasons appear to be directed to the statement of reasons the costs assessor issued (presumably under reg.41(1)(a) of the LPUL Regulations) at the time the costs assessor issued the Costs Certificate, not to the determination the costs assessor recorded in the Costs Certificate which the costs assessor issued under s.70 of the LP Act. It is not apparent there is any power that would permit a costs assessor to supplement a statement of reasons that had been issued under reg.41(1)(a), in relation to a determination that is not the subject of a new determination.
Seventh, although in her email of 8 September 2020 the costs assessor informed the parties she proposed “to issue a Further Statement of Reasons with respect to inadvertent errors”, the costs assessor did not identify the power or basis on which she intended to issue a “Further Statement of Reasons”. In particular, the costs assessor did not refer to reg.43 of the LPUL Regulations, or that she intended to issue a “Further Statement of Reasons” purportedly on the basis of that regulation; the costs assessor did not identify what it is the costs assessor considered might be the inadvertent errors; and the costs assessor did not invite the parties to make any submissions about whether the costs assessor had the power to issue any “Further Statement of Reasons with respect to inadvertent errors” and, if so, whether there were any inadvertent errors. In these circumstances there is a risk that, even if there were available a power that authorises the issuing of a statement to the effect of the CA Supplementary Reasons, the costs assessor’s decision to exercise such power by issuing the CA Supplementary Reasons may be liable to be held to have no legal effect as having been made in breach of an obligation to accord the parties procedural fairness.
The hearing of 11 September 2020
Three broad matters were addressed at the hearing on 11 September 2020. The first was evidence and explanations Mr Wiederman and counsel for the respondent gave about Mr Wiederman’s sending the email of 4 September 2020. The second concerned submissions about the significance of the CA Supplementary Reasons. The third related to the respondent’s application to strike out parts of the SAC. In this section of my reasons I will briefly address the evidence and explanations Mr Wiederman and counsel for the respondent gave in relation to the sending of the email of 4 September 2020.
Mr Wiederman accepts that, when on 9 September 2020 he read the transcript of the hearing of 3 September 2020, he became aware that a “different understanding” was expressed in the transcript than that which he held at the time he sent the email on 4 September 2020. Mr Wiederman has deposed that if “I have been mistaken in understanding the Court’s intention, I humbly apologise. It was never my intention to do any act outside of the Court’s directions or intention.” This apology is of little value. It is unaccompanied by any offer to make amends; and it is made in circumstances where the respondent has not only made no attempt to correct the misunderstanding, but has indicated it intends to take advantage of the fruit of the misunderstanding, that fruit being the CA Supplementary Reasons.
Counsel for the respondent, Ms Castle, confirmed she had drafted the text of the email Mr Wiederman sent to the Manager, Costs Assessment on 4 September 2020. Ms Castle, however, said that when she read “line 30 of . . . page 9” of the transcript of 3 September 2020 she “was shocked” because she had “no memory or awareness of your Honour having said, “Or the application for an extension of time””.[20] Ms Castle also said “if I have misunderstood the court, then I unreservedly apologise, and am mortified at the thought”.[21] There are two things to be said about this. First, I informed Ms Castle that I would accept what she said was her understanding of what I had said on 3 September 2020, although I also said it was not a reasonable understanding. Second, the apology is of little value. Ms Castle did not say the respondent has attempted or intends to make any amends for the misunderstanding. On the contrary, Ms Castle informed me the respondent intends to rely on the fruits of the misunderstanding, the CA Supplementary Reasons.
[20] 11.09.2020 T44.35
[21] 11.09.2020 T40.25
Should respondent be restrained?
At the hearing on 11 September 2020 counsel for the respondent informed me she had instructions that “the respondent intends to withdraw the application for review and the application for an extension of time as a result of the supplementary submissions given by Ms [M] on 9 September”. Counsel submitted that the issuing of the CA Supplementary Reasons has the effect of rendering the date on which those reasons were issued as the date on which the application for assessment for costs the respondent made on 2 April 2019 was determined. The question arises whether the instructions counsel for the respondent conveyed to me at the hearing is a matter that weighs against my making an order restraining the respondent from taking any further action in relation to the Costs Review Application.
Before I answer that question, it is necessary to refer to the passage from the judgment of the Full Federal Court in Perera that I reproduced earlier in these reasons which identifies two grounds on which a court, in the exercise of its equitable jurisdiction, could restrain a party before it from commencing or continuing with a proceeding in a different tribunal, and consider whether those grounds apply to the respondent’s maintaining the Costs Review Application. One of the grounds referred to in Perera is where if the party were permitted to commence or continue the other proceeding, the integrity of the Court’s processes would be adversely affected because, for example, the maintenance of the other proceeding will “interfere with, or have a tendency to interfere with, the proceedings pending in the court”. The second ground is where a party’s commencing or continuing with the other proceeding involves the unconscientious exercise of legal rights because, for example, the continuation with the other proceeding would be vexatious or oppressive.
In my opinion, both grounds would be engaged if the respondent were to continue with the Costs Review Application.
a)First, there is a tangible possibility that, assuming an extension of time is granted, the costs review panel will make findings that will be inconsistent with the findings I may make in relation to whether the costs assessor made the errors the respondent claims it made, and whether those errors are jurisdictional errors. Thus, there is a risk there will be inconsistent findings by different bodies on the one set of claims.
b)Second, the nature of the relief the respondent seeks in the Costs Review Application is different from the relief that may be available if I were to conclude the costs assessor had made a jurisdictional error. The remedy the respondent seeks in the Costs Review Application is the exercise of merits review by the review panel, not the exercise of any judicial review jurisdiction, jurisdiction which the costs review panel does not possess. That may give rise to the possibility that this Court will find that the costs determination is affected by jurisdictional error, which might render any determination by the costs review panel being of no legal effect because the costs determination the subject of their review is of no legal effect.
c)Third, it would be oppressive and vexatious for the applicant to participate in parallel proceedings where she may be exposed to different procedural regimes, different rules of evidence, and different times by which procedural steps may need to be taken.
I return, then, to the question whether counsel’s communicating to me the respondent’s instructions that it “intends to withdraw the application for review and the application for an extension of time as a result of the supplementary submissions given by Ms [M] on 9 September” should lead me to find there is no risk the respondent will continue with the Costs Review Application. That question is to be assessed by reference to the following matters:
a)The respondent has not offered an undertaking to the applicant or to the Court that it will abandon or withdraw the Costs Review Application, or that it will inform the Manager, Costs Assessment that it intends not to continue with the Costs Review Application.
b)The respondent made the Costs Review Application without any notice to the Court or, apparently, to the applicant.
c)The respondent says its lawyers misunderstood the words by which at the hearing on 3 September 2020 I intended to convey what I expected the respondent would communicate to the Manager, Costs Assessment. That suggests that I ought to express my understanding and expectation in the form of written orders.
d)The basis on which I understand the respondent says it intends to withdraw from the Costs Review Application is the CA Supplementary Reasons. The respondent is apparently of the view that the CA Supplementary Reasons is “a new determination in substitution for the previous determination” within the meaning of reg.43 of the LPUL Regulations, and it otherwise has legal effect. Given the matters I have identified above, there is a substantial possibility that the respondent will reflect on whether these views are correct and form a different view, causing it to reconsider the instructions its counsel conveyed to me at the hearing on 11 September 2020.
In these circumstances, I am satisfied there is a substantial risk the respondent will not send any communication to the Manager, Costs Assessment to the effect that it abandons the Costs Review Application; I am also satisfied there is a substantial risk that, unless restrained, the respondent will continue to maintain that application. I therefore propose to make an order restraining the respondent until further order from taking any further step or steps in the Costs Review Application, other than such step or steps as is or are necessary to withdraw or abandon that Costs Review Application.
Should the costs assessor be joined as respondent?
At the hearing I informed the parties why I invited submissions on whether the costs assessor should be added as a party and whether the applicant should amend the application to claim orders under s.69 of the Supreme Court Act 1970 (NSW) (NSWSC Act) in the nature of certiorari and mandamus. That reason is based on a submission counsel for the respondent made at the hearing of 3 September 2020. Counsel submitted that in the third judgment I incorrectly assumed that, if I were to find the costs assessor made a jurisdictional error and the costs determination, therefore, was of no legal effect, the respondent would be able to apply under s.198(4) of the Legal Profession Uniform Law (NSW) (LP Law) for an assessment of its costs outside the 12 month period provided for by s.198(3) of the LP Law. This difficulty (which would arise only if the costs assessor were to be found to have made a jurisdictional error) would be avoided by making an order in the nature of mandamus requiring the costs assessor to reconsider the application for a costs assessment. On later reflection, it occurred to me that the costs assessor would be a necessary party to an application for judicial review of her costs determination.[22]
[22] Federal Circuit Court Rules 2001 (Cth), r.11.01(1)
Counsel for the respondent did not submit I should not require the applicant to file an amended application that includes the claiming of orders under s.69 of the NSWSC Act. Counsel for the respondent limited her submissions to observing that it was “extraordinary” that the Federal Circuit Court could exercise the jurisdiction conferred on the Supreme Court of New South Wales by s.69 of the NSWSC Act. The answer to that observation is s.79(1) of the Judiciary Act 1903 (Cth).[23] In any event, although I propose to order the applicant file an amended application in which the costs assessor is named as a second respondent, I do not propose to order the applicant claim orders under s.69 of the NSWSC Act; and that is because the respondent is content to proceed on the footing that the date of the costs determination is the date on which the costs assessor issued the CA Supplementary Reasons.
[23] As construed by the plurality in Rizeq v Western Australia [2017] HCA 23
In addition to ordering the applicant file an amended application naming the costs assessor as a respondent, I propose to order that the applicant include in the amended application a claim for a declaration that, on the grounds advanced by the respondent in the Costs Review Application, the costs determination is affected by jurisdictional error and is of no legal effect. Further, given the use the respondent has indicated it proposes to make of the CA Supplementary Reasons, I will note in the orders I propose to make that the validity of the CA Supplementary Reasons, and, in particular, whether it is a “new determination” within the meaning of reg.43 of the LPUL Regulations and, if it is, whether the costs assessor issued it in breach of any duty to accord the applicant procedural fairness, are issues in the proceeding.
Application to strike out SAC
The SAC identifies the orders the applicant claims and, in relation to each of the orders, the facts and matters on which the applicant relies. The respondent applies to strike out those parts of the SAC that appear under orders 2, 3, and 4 (the challenged paragraphs). Before I consider the parties’ submissions, it will be necessary to address a number of preliminary matters.
The first concerns the basis on which the respondent seeks to strike out the challenged paragraphs. At the hearing I enquired of counsel whether the respondent seeks to strike out the challenged paragraphs on the ground that the applicant does not have reasonable prospects of succeeding on the claims made in those paragraphs, or whether the application is made on the basis that the challenged paragraphs do not comply with the rules of pleading. Counsel for the respondent said the respondent relied on the latter. That, however, does not accurately characterise all of the grounds on which the respondent relied for applying to strike out the challenged paragraphs.
Second, by ordering the applicant to file and serve a SAC, I did not order the applicant to plead her case. What I ordered was that the applicant identify the orders she seeks, and the facts and matters on which she relies for claiming such orders. The purpose of the document was for the applicant to give proper notice of the case that the applicant intends to make to enable the respondent to be in a position to meet it. That the SAC might not comply with the rules of pleading would not by itself mean it does not give fair notice of the applicant’s case.
Third, there is the question of how I ought to construe the SAC. In my opinion, I ought to be guided by what the High Court said in Neil v Nott, namely, that a “frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy”.[24] In other words, I propose to construe the SAC with a view to ascertain what rights, if any, can reasonably be taken to be asserted by the text of the SAC.
[24] Neil v Nott (1994) 68 ALJR 509, at page 510
A fourth matter relates to the evidence to which I may have regard when considering the parties submissions. Counsel for the respondent submitted I should only have regard to the text of the SAC. The difficulty with that submission is that the SAC refers to evidence. The evidence referred to in the SAC, therefore, forms part of the SAC. To that extent, it is necessary to have regard to the evidence in order to construe the SAC.
Order 2
Order 2 claims:
That the Respondent return the sum of $103,000 and any interest accrued, being the total monies held pursuant to an equitable lien received by the Respondent, to the Applicant within 30 days or otherwise as the Court deems appropriate.
The matters on which the SAC relies for this order are as follows:
a)On a particular day consent orders were made to the FCoA “that the sum of $100,000 be paid to the Respondent for partial payment of legal fees”.[25] The footnote to that allegation refers to annexure “E” to the applicant’s affidavit of 24 April 2020. That is an incomplete copy of the orders of the FCoA.
b)The respondent held $3,000 of the applicant’s money in trust to undertake a valuation for the FCoA proceeding.[26] The footnote to that allegation refers to annexure “U1” to the affidavit of Ms A made on 12 May 2020.
c)The respondent has submitted that jurisdictional error had occurred and therefore the respondent “is no longer entitled to these monies as there is no true debt or right to equitable liens”.[27]
[25] SAC, [16]
[26] SAC, [17]
[27] SAC, [18]
The respondent submits this part of the SAC should be struck out because the money was paid as a result of an order made by consent, and because the order was made by the FCoA. The respondent submits, therefore, that ground 2 constitutes a collateral attack of an order of the FCoA.[28] In her written submissions, the applicant submits the respondent has no title to the money that was paid, given, among other things, the respondent, in the Costs Review Application, stated that a risk of a finding of jurisdictional error “give[s] rise to the risk that the Review Applicant [being the Respondent] has to disgorge the monies ($100,000) that it received by order of the Family Law Court”.[29]
[28] Submissions on Behalf of the Respondent on Strike-Out Application, [4]-[6]
[29] Affidavit of applicant 11.09.2020, [12]
It is to be noted that the respondent does not seek to strike out Order 2 because it does not comply with the rules of pleading. The application is based on the contention that this part of the SAC will fail because it constitutes a collateral attack on an order of the FCoA. To assess whether the applicant is bound to lose this part of her claim, it will be necessary to refer to the terms of the order and the context in which it was made, which I had briefly set out in the first judgment.[30]
[30] Sommer v C Pty Ltd [2020] FCCA 1412, at [42], [43]
The $100,000 was paid into the respondent’s controlled account pursuant to an order made in April 2019. It was paid into the controlled account out of the proceeds of sale of property, and it was to be held “pursuant to an equitable lien”. The order to which Order 2 of the SAC applies (FCoA order) is as follows:
By consent, [the respondent] release the monies held by [the respondent] in a controlled monies account on behalf of the [applicant] in the sum of $100,000 together with interest to [the respondent] in partial payment of legal fees and disbursement owed by the [applicant] to [the respondent] pursuant to the Certificate of determination of Costs issued by the Supreme Court of New South Wales dated . . . .
The FCoA order grants the respondent permission to release to itself the $100,000 in the controlled account. It was premised on the applicant owing to the respondent the amount of the costs recorded in the Costs Certificate. The applicant now claims that the Costs Certificate is of no legal effect. The applicant further claims the respondent is not entitled to any equitable lien. In those circumstances, it is reasonably arguable that Order 2 does not challenge the FCoA order, directly or indirectly. First, it is reasonably arguable that the FCoA order went no further than authorising the release of the money, and Order 2 is not premised on the view that the order did not have effect according to its terms. Second, it is reasonably arguable that any liability to pay the amount recorded in the Costs Certificate did not arise from any order the FCoA made; it arose, to the extent it arose at all, by the operation of the LP Act.[31] Thus, by claiming the Costs Certificate had no legal effect and, for that reason, the respondent had no right to claim payment of the $100,000 released, it is reasonably arguable that Order 2 is not directed to the FCoA order.
[31] As to the relationship between a costs certificate and a judgment entered on the basis of a costs certificate see the authorities referred to in Obrart v Grego [2017] FCCA 929, at [60]-[63]
I therefore will not make an order striking out Order 2 and paragraphs 16 to 19 of the SAC.
Order 3
Order 3 claims as follows:
That the Applicant is awarded for economic injury and emotional distress as a result of the Respondent’s breaches of the Retainer Agreement, breach of fiduciary duty and pursual of the Bankruptcy Notice to its finality.
The alleged facts and matters on which the SAC relies for this order are as follows:[32]
[32] SAC, [20]
a)The Costs Assessor had deemed the “Retainer Agreement” to be void.
b)The respondent failed to provide appropriate disclosure between 2015 and 2016.
c)The respondent failed to provide appropriate disclosure before briefing counsel.
d)The respondent and applicant had negotiated that the fees would be payable on the conclusion of the FCoA proceeding “in line with clause 10 of the STE”.
e)The respondent had always performed under the “Retainer Agreement” with full knowledge money would be paid on final settlement.
f)The respondent threatened to terminate “the Retainer” if the applicant did not obtain additional money to pay the respondent and counsel within 24 hours.
g)The respondent did not terminate “the Retainer” under any of the permissible grounds under clause 20 of the “STE”.
h)The respondent and counsel acted negligently and below a satisfactory standard.
i)The respondent and counsel engaged in professional misconduct.
In separate paragraphs the applicant asserts as follows:
a)The applicant did not terminate the “Retainer Agreement”.[33]
b)The respondent obtained a charge over property without specifying an amount the charge would secure, thus enabling the respondent and counsel to continue to charge their fees on the basis that their payment would be secured by the charge.[34]
c)The applicant felt bullied and pressured by Ms A and counsel at the conference of 5 March 2019.
[33] SAC, [21]
[34] SAC, [22], [23]
The SAC should also be read with paragraphs 28 to 41 of the applicant’s affidavit made on 11 September 2020. In paragraph 41 of that affidavit the applicant says that the relief she seeks is that “no legal fees are owed to the Respondent due to the breaches of contract and fiduciary duties”.
There is no question that this part of the SAC does not properly plead causes of action for breach of contract and breaches of fiduciary duty. The question, however, is whether the paragraphs give fair notice of the case the applicant intends to advance. In my opinion this part of the SAC gives fair notice of the applicant’s case; and this may be stated in the following propositions:
a)It was the respondent who terminated the “Retainer Agreement”, not the applicant.
b)The respondent terminated the “Retainer Agreement” in circumstances where it was not entitled to do so.
c)The respondent had a duty to disclose to the applicant revisions to the $82,500 estimate of costs the respondent had given at the time the “Retainer Agreement” was made, but the respondent failed to do so.
d)The respondent had a duty to provide to the applicant an estimate of the fees of engaging counsel but the respondent failed to do so.
e)The respondent and counsel had a duty to disclose to the applicant their fees for providing legal services as they were being incurred beyond the original cost estimate, but they failed to do so; and they failed to do so because they had taken a charge over the applicant’s property as security for their fees without specifying a limit of the fees for which the charge would provide security.
f)In the circumstances referred to in (e), the respondent and counsel breached their duty to the applicant; and, additionally, they placed themselves in a position where their interest in earning fees conflicted with the duty they owed to the applicant to disclose their fees and to act in the applicant’s interests.
g)Because of the above, the “Retainer Agreement” is void, and the applicant owes no legal fees to the respondent.
Read in this way, which is the way I propose to read this part of the SAC, I do not propose to order that Order 3 and paragraphs 20 to 24 be struck out.
Order 4
Order 4 claims that “equitable relief is granted to the Applicant for the economic injury and emotional distress caused by the Respondent’s representations”. The matters on which the SAC relies for this relief are set out in paragraphs 25 to 29 of the SAC. They relate to advice it is alleged the respondent and counsel gave to the applicant on 3 November 2017 in relation to the making of a Calderbank offer, but the respondent and counsel subsequently giving advice which the applicant alleges was different from the advice they gave in relation to making a Calderbank offer. The SAC claims that the applicant should be awarded damages on the footing that the Calderbank offer would have been accepted.
On its face, the claim is difficult to follow; and there is also a question whether the claim, assuming it can be adequately framed, can be said to arise out of the same substratum of facts out of which the claims on which the applicant relies for seeking to set aside the bankruptcy notice arise. For these reasons, I propose to order that Order 4 and paragraphs 25 to 29 of the SAC be struck out. I will, however, grant the applicant leave to file an amended SAC to reformulate paragraphs 25 to 29 of the SAC if the applicant so elects.
Conclusion and disposition
In paragraph 47 of the first judgment I identified the issues I understood arose from the material that was before me; and in paragraph 60 of that judgment I listed a set of questions in relation to which I said I proposed to invite submissions at the hearing. I was satisfied that given the issues I had identified, and the material that had been filed, the matter was ready to be listed for hearing, subject to making directions for the parties to file additional evidence; and on 5 June 2020 I listed the matter for hearing on 10 July 2020.
As is apparent from these reasons for judgment, much has occurred in the proceeding after 5 June 2020; and there are three things to note about that.
a)First, for all that has occurred after 5 June 2020, the issues I identified in paragraph 47 of the first judgment appear to me to remain the principal issues that arise out of the applicant’s claim that the respondent wrongfully terminated the “Retainer Agreement”.
b)Second, the matters I identified in paragraph 60 of the first judgment have been transformed from potential issues to actual issues; and that is because the respondent claimed in the Costs Review Application that the costs determinations contains errors which the respondent had submitted are jurisdictional errors.
c)Third, subject to one exception, the claims that will remain in the SAC are consistent with the issues I identified in paragraphs 47 and 60 of the first judgment. The exception relates to the matters on which the applicant relies for Order 3 which I have set out in paragraph 67 of these reasons. I do not consider these to be new claims. As the applicant submitted, they reflect the substance of the complaints the applicant made to the Legal Services Commissioner and in her opposition to the respondent’s application for assessment of costs; and the documents evidencing these complaints have been annexed to affidavits that have been filed in this proceeding, including to the affidavit of Ms A made on 12 May 2020.
These are the principal questions and claims which in my opinion fall to be determined at the hearing of the matter.
I now turn to the orders I propose to make.
a)I will order that order 4 in the SAC and paragraphs 25, 26, 27, 28, and 29 of the SAC be struck out, but grant leave to the applicant to reformulate that part of the SAC if she so elects.
b)I propose to order that, until further order, the respondent be restrained from taking any step in relation to the Costs Review Application, other than taking such step or steps that is or are necessary to withdraw or abandon the Costs Review Application.
c)I will order that by 22 September 2020 the applicant file an amended application in which the costs assessor is added as a respondent and in which the applicant adds the following claim for relief:
A declaration that, on the grounds stated in the “Grounds of review” contained in the “Application for Review of Determination(s) of a Costs Assessor” the first respondent lodged on 23 July 2020 with the Manager Costs Assessment pursuant to s.83 of the Legal Profession Uniform Law Application Act 2014 (NSW) the costs determinations recorded in the Certificates of Determination of Costs issued by the second respondent on 18 July 2020 are affected by jurisdictional error and for that reason are of no legal effect.
d)I have drafted a form of the amended application I will require the applicant to file, and I will note in the orders I propose to make that on the day the orders are pronounced my associate will forward to the parties by email the form of the amended application the applicant is to file. The draft amended application states that the matter is listed before me at 9.30 am on 2 October 2020, being the day on which I propose to list the matter for further directions. The draft amended application also states that, in the alternative to filing a notice of appearance, the costs assessor may file a submitting notice.
e)I will order that by 5.00 pm on 25 September 2020 the applicant serve by email the amended application and a sealed copy of these orders on the respondent, the costs assessor, and the Manager, Costs Assessment.
f)I will vacate the dates that were fixed for hearing by order 6 of the orders I made on 21 August 2020 and instead fix the matter for hearing on 14 and 15 October, subject to the parties informing my associate that those dates are not convenient, in which case I will list the matter for hearing for two days on other days in the weeks commencing on 12 and 19 October 2020 that are convenient to the parties. I will also vacate order 4 of the orders I made on 21 August 2020.
g)I will order that the respondent file and serve any additional affidavits on which it intends to rely by 25 September 2020.
h)I will list the matter for further directions at 9.30 am on 2 October 2020. The purpose of the directions hearing is to determine whether the costs assessor intends to take an active part in the proceeding, whether the applicant intends to apply for leave to reformulate that part of the SAC I propose to strike out, whether the parties intend to issue notices to produce, and whether the applicant wishes to file an affidavit in reply to the affidavits the respondent will file.
i)I propose to make an order under s.41(6A) of the Bankruptcy Act 1966 (Cth) extending the time for compliance with the requirements of the bankruptcy notice up to and including 15 October 2020.
j)I will note in the orders that the following are issues in the proceeding: whether the CA Supplementary Reasons is a “new determination” within the meaning of reg.43 of the LPUL Regulation; and, assuming the CA Supplementary Reasons is a “new determination” within the meaning of that regulation, whether it has any legal effect because it may have been issued in breach of any duty of procedural fairness the Manager, Costs Assessment, or the costs assessor may have owed the applicant, or for any other reason having regard to the circumstances in which the “Further Statement of Reasons” was issued.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 18 September 2020
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